Dian Kuswandini, The Jakarta Post, Jakarta | Mon, 07/07/2008 10:31 AM | Headlines When stylish, metropolitan women stroll along with a Louis Vuitton Pleaty bag, they exude an air of high class, impeccable taste and considerable purchasing power. And because this effect does not come cheap, some resort to buying knockoff designer goods that have found permanent homes in the malls and along the pavements of the country's main cities. Unlike fake cosmetics or medicines, commodities that can be potentially lethal, replicated fashion goods seem harmless -- especially on the consumers' pockets. The Justice and Human Rights Ministry admitted state losses due to counterfeit goods were impossible to calculate, although the ripple effects are being felt far and wide. "It has caused Indonesia to gain a bad reputation internationally, caused lost revenue because counterfeiters do not pay taxes and has hampered foreign investment because investors have lost their faith in our protection of intellectual property rights," Ansori Sinungan, the ministry's director for copyrights, industrial design and trade secrets, told The Jakarta Post recently. He said reports of brand violations were on the rise since 2004, with 83 cases recorded in 2007 -- up from 69 cases in 2006. The 2004 and 2005 figures stand at 61 and 63 respectively. Of the 83 cases reported last year, only 45 have been tried in court, Ansori said.

One counterfeiter, Ninna Aryanto (not her real name), said strong demand, cheap materials and a talented labor pool, as well as high returns, were some of the factors driving the growing trade in counterfeit fashion products. Ninna, who started her Louis Vuitton (LV) replica business eight years ago, receives orders from buyers as far away as Sweden and Austria. In her small studio in Bali, she employs five workers, each working on a different process -- pattern drawing, leather cutting, stamping, stitching and sewing.

"I do a lot of research, mostly from LV-authorized boutiques, catalogs, the Internet and first-hand experience with authentic LV bags," she said. "I study all sorts of details, such as the fabric lining -- whether it's canvas, microfiber suede, cowhide leather or micro-monogram denim." Claiming her knockoff LVs are of the highest grade, Ninna said, "I sell a limited number of LV replicas to foreign high-class buyers. They know the quality of my products very well, that's why they're confident about using them." "I use high quality monogram leather with real oxidizing leather handles and trim, just like authentic LV products. I carefully inspect each bag -- no missing stitches and no gaps in the stitching, no loose threads, no materials that don't lay right or zippers that don't work properly." She said each fake LV bag cost between Rp 300,000 and Rp 400,000 to make. Her knockoff of the LV Monogram Multicolore Alma sells for US$250, with the authentic item retailing for $1,600. Ninna said her husband, a foreign national, was responsible for delivering the bags on his monthly visits to Europe. "The reason is simple: My husband can trick both Indonesian and EU customs officials by pretending to be a tourist who has bought souvenirs from Indonesia," she said. Ansori said a major reason for the flourishing counterfeiting business was the lack of severe legal consequences for counterfeiters. He said the 2001 law on trademarks was designed to provide copyright protection and support fair competition in trade, but allowed most offenses to be punishable by fines rather than imprisonment. The maximum fine under the law is set at Rp 800 million. On the topic of protection for brand-name items, Ansori said, "Indonesia has moved a step forward in complying with a World Trade Organization agreement last year to protect brand-name products." He said prior to this agreement, there was a "first to file" loophole in the law, which meant protection for the person or company that first registered a brand in the country, regardless of whether they actually owned the rights to it. He cited the example, a few years ago, of a dispute between Italy-based Prada S.A., owners of the Prada brand since 1913, and an Indonesian citizen Fahmi Babra. By registering the brand name Prada in Indonesia in 1995, Fahmi was allowed to use the Prada brand on his products. Prada S.A. took the case to court and was eventually named the official trademark owner of Prada in the country. Ansori said because of the WTO agreement, such cases were now a thing of the past. PT Mitra Adi Perkasa (MAP), Indonesia's leading retail marketer of brand-name products, said counterfeiting well-known designs was inevitable and difficult to prevent. "It is difficult to control such practices. But as long as it doesn't greatly affect our sales, we won't bother taking further action," Ratih D. Gianda, MAP head of investor relations, told the Post.

Driving a car can be an adventure. Most days, it’s humdrum; other days, frustrating. But whatever the state of the roads, a beautiful car design might make any journey is a pleasurable one.

With the cars in each class having the same function, the same build, the same durability and the same engine power, design is what could make the difference. And because every automaker wants to stand out, they are striving to put out sexier-looking cars to attract buyers who once may have been sold on performance, power and after-sale service alone.

“Over time, cars have become like clothes,” says Achmad Rizal, marketing and communications manager of Toyota Astra Motor. “They’re all about fashion that fits our lifestyle.”

Rizal points out that Indonesians are moving in a direction where fashion and image are more important than functionality. Men drive tough-looking SUVs (sport-utility vehicles) to show off their machismo; women choose SUVs to warn people not to mess with them on the streets.

“You wouldn’t expect a woman to drive an SUV, right?” Rizal says. So, he adds, when dealing with things like street crime, “women can trick [people] because they drive an SUV.”

“The trend is not about whether it’s an SUV or an MPV [multi-purpose vehicle] anymore,” Jonfis says. Rather, “it’s about how one design can cross over with another, and how features of one car are mixed with features of other cars to meet people’s demands.”

Examples of design crossover can be seen in MPVs. Once upon a time, Jonfis explains, MPVs were all about size, and tended to have a flat, square design.

“But now they’re changing,” Jonfis says. “The front end is taking on a triangular shape like sedans, while the rear is in the square shape.”

As a result of these combinations, MPVs flaunt the artistic curves of an aerodynamic style, while at the same time maintaining the prime function of their interior space at the rear to fit more people or luggage.

“After all, the basic concept of car design is to create minimum space for the machine and maximum space for the car’s volume, in this case passengers or luggage.”

Consequently, Jonfis points out, the challenge is to create cars that look compact from the outside, but are spacious on the inside.

Heading in this design crossover direction, Honda has just launched its luxury MPV, the Honda Freed. This sleek-looking minivan’s name is a combination of “free + do”, which means passengers can move freely inside the car, thanks to its “walk-through cabin”. Embracing the concept of a “triangle square + curving art surface”, Freed offers a new level of luxury and comfort.

“With Freed, MPVs aren’t only about carrying seven or 10 people anymore, but also about beautiful and luxurious design,” Jonfis says. “Drivers [and passengers] get the comfort of a sedan as well, without missing out on safety aspects.”

And Freed isn’t the first Honda car to embrace the design-crossover concept. The Honda CRV has also crossed the boundaries of the basic concepts of an SUV.

There’s no denying that MPVs and SUVs are the prima donnas in the local automotive industry. So it’s no wonder automakers today are seeking ways to combine the most attractive features and designs of the two.

“On one side, Indonesian people are family-oriented, so they need a car that is big enough [like an MPV],” says Tri Mulyono, executive coordinator of the public relations department of Daihatsu Astra Mobil. “Besides, in a time of crisis, people seek multifunctional cars that are efficient in terms of fuel use.”

On the other hand, “People see SUVs as stylish cars, especially those who live in the city but still want to have that ‘off-road’ look.”

This demand is driving the ongoing efforts to combine designs and features of existing models. The idea of crossover design is also behind the designs from German automaker Volkswagen (VW). Volkswagen claims it is rejecting labels such as MPV or SUV, and instead making driving pleasure the top priority.

“Volkswagen cars do not emphasize [car] types,” says Andrew Nasuri, CEO of Volkswagen Indonesia (Garuda Mataram Motor). “Instead, we emphasize the concept of ‘fun to drive’ where a car is enjoyable for both drivers and passengers.”

According to this “fun to drive” concept, Volkswagen car designs ignore any restrictions, freely mixing one type of VW with another to fit customers’ tastes. The Volkswagen MPV Touran, for example, is infused with a sports-car feel.

“It’s a family sports car,” Andrew says of the car that was launched in Indonesia in June this year.

For an MPV, the label of “family sports car” truly sounds sexy. And to match the sexy concept, the look is sexy as well. Volkswagen lovers will find the Touran looks similar to the VW Golf. The headlights are curvy and overall the front end is aesthetically appealing. Perhaps it could be said that the Touran is a longer version of the Golf.

Another Volkswagen car that demonstrates the style trend in car design in the way it embraces the sporty look is the Tiguan. The Tiguan shows clearly what happens when designers breed a sports car with an SUV. It’s designed for car drivers who enjoy SUVs’ individual look of versatility, but also expect a high-end level of comfort, agility and variability.

And in the same way an SUV is built to go off-road — its original purpose — the Tiguan is created to face tough urban road conditions such as potholes or flooding. Endowed with that sports-car feel, the Tiguan is injected with fun as it takes drivers through the “urban jungle”.

The fever for sporty designs has infected not only Volkswagen. Japanese automaker Mitsubishi is injecting a strong spirit of “tough, macho and sporty” into its car designs, among them the new Pajero Sport.

Once a name linked only to off-road vehicles, the Pajero has returned with a sportier version, in a design that fits with urban family use, characterized by more a more spacious and comfortable interior.

“With Pajero Sport, not only can you carry more people, but you also get a stylish look,” says Intan Vidiasari, head of public relations for Mitsubishi Indonesia.

Aside from the cool design of Pajero Sport, Mitsubishi is taking the design crossover concept further with its “green” concept car, the i-MiEV Sport.

This sporty electric car is based on its predecessor i-MiEV, which has been available in Japan since last year. The name “MiEV” itself comes from “Mitsubishi Innovative Electric Vehicle”.

“Most of the time, green or hybrid cars using high technology adopt stiff, boring designs,” Intan says. “But we want to break that line, offering a high-tech car that is fun to look at and drive.”

The i-MiEV Sport is reminiscent of the VW New Beetle. It’s small, roundish and looks playful. With a sporty style on the outside, the i-MiEV is infused with futuristic design features on the inside.

Although it’s still a concept car, the i-MiEV Sport sets a trendy example of what a hybrid car should look like, Intan adds.

“People do not only go for high technology. After all, they look for designs, and [in the future] they want cars that are not as boring as the concept of high technology itself,” she says.

Well said. It seems that cars will continue to cross over from one design to another, as automakers move to keep up with people’s changing lifestyles.

As Jonfis points out, “One day, a family won’t have to own many cars, but only one car that will meet the needs of all its members.”

The Jakarta Post, Jakarta | Mon, 06/30/2008 10:50 AM | Business Celebrating its eighth anniversary on June 30, Lion Air is to expand its business by serving more international routes, in the Asia-Pacific region in particular, and is eying international airlines to acquire. Lion Air, known as the low-cost carrier trendsetter, is the first airline in the world operating the newest Boeing 737-900ER. The company, which currently controls almost 35 percent of the Indonesian market, began its domination of the industry when it ordered 178 units of Boeing 737-900ER in 2005. The first delivery of seven aircraft arrived last year, with eight more expected this year. All aircraft will have been delivered by 2016. Lion Air's president director Rusdi Kirana, who is also the former chairman of the Indonesia National Air Carriers Association (INACA), shared his company's plans and business strategy with The Jakarta Post'sDian Kuswandini.Question: What are the reasons behind Lion Air's plan to expand?Answer: Everyone is talking about how globalization will lead to an open-sky market. For some, it's a threat to the local airline industry, but for me, it's an opportunity to expand. I'm not letting Lion Air become only a spectator. That's why we have set plans to go regional and have ordered 178 units of the latest Boeing 737-900ER to support the plans. Recently, we opened routes to Vietnam and Singapore. By the end of this year or early next year we'll fly to Hong Kong, followed by routes to China, Australia, Saudi Arabia, Jeddah, Riyadh and India. We already obtained the permits for all of the routes from the Transportation Ministry. We'll also acquire some airline companies in other countries, like Australia, Thailand and Malaysia. But it's still in process. With Lion Air's strong capital and continually growing human resources of some 5,000 people -- 400 pilots and 700 aircrew members -- I'm positive about our plans. How will you finance your plans?We have many options, like banks, sponsors and leasing companies. Some of our aircraft are rented while some are paid in installments. In terms of funding, finance firms will consider the company's reputation and its country of origin. Lion Air has never been in bad debt and has been one of the most favored airlines here; that's why we get financial support easily. The finance firms see Indonesia as a big and promising market. Soaring oil prices have hurt the airline industry. How do you deal with price rises, especially when Lion Air is a low-cost carrier?The soaring oil prices is really a dilemma, but it's not the end of everything. It's like natural selection, and the best will survive. Our strategy is to use new aircraft as they're more efficient in fuel consumption and provide greater capacity. For example, the old Boeing 737-200 only has 110 seats and its fuel consumption is 3,500 liters per hour. The new 737-900ER has 213 seats and its fuel consumption is 3,300 liters per hour. Before the oil price increases, 30 percent of the company's operational costs went to fuel. Now, it's around 50 percent for new aircraft and 80 percent for the old ones. So, there's a big gap there. Yes, new aircraft are more expensive, but their maintenance costs are lower compared to the old ones. The local airline industry has been accused of ignoring safety standards, which has led to many accidents and being blacklisted by the EU. Your comments?Air transportation is like a celebrity; a little mistake will spark gossip and blame. Even a troubled tire could be a headline. Other modes of transportation, like buses, could have worse accidents, but people pay less attention to them. There's widespread gossip saying airlines fly with limited fuel in order to save costs. That's very wrong. No airline would want to take the risk of having an accident in fear of being bankrupt. As for the EU ban, I see it as something unfair. Logically, before you ban something, you should first issue a warning. A ban is imposed when a warning is ignored. So, the EU should give airlines a chance before imposing bans. There should always be room for improvement. We learn form our mistakes. Has Lion Air also learned from mistakes?Of course. From past accidents we've learned that good human resources are nothing without good systems and technology. You can have the best pilots, but after all, they're just humans. They can be tired sometimes. Understanding this, we have supported our employees with the latest systems and technology in our new aircraft. For example, we have FOQA (Flight Operational Quality Assurance) systems that allow us to monitor our pilots while doing their jobs. Their activities are recorded and if they don't meet the required standards, they have to be trained again. Another system we use is the Geneva system, which provides data on our employees. For example, if a pilot or an aircrew member tries to work overtime, the system will reject them and they're not allowed to fly. Our rule is, a pilot can't fly more than 80 hours per month. We also have the Trax system, which allows us to track our maintenance activities and detect locations of our spare parts. The system will warn us when it finds a plane is in poor condition. We also have the ACARS (Aircraft Communications Addressing and Reporting System), which informs us of our planes' conditions when they're in operation. The system transmits the data to our office, so we always know when our planes are having trouble. Our other technological device is Radar 4000, a 3-D device. While ordinary radars can detect a mountain, for example, this one can detect what's beyond the mountain. Mid next year, we'll also use the Stabilizer Approach Monitor (SAM) system. It will give early warnings to pilots with alarms if they are likely to have unstable landings, whether its because they are at too high a speed or to high an altitude. With these latest systems, we'll start phasing out our old aircraft in September.

Dian Kuswandini, The Jakarta Post, Jakarta | Mon, 06/30/2008 10:49 AM | Headlines The government's plan to integrate several state-owned construction companies into a holding company has been suspended following an alarm from the Business Competition Supervisory Commission (KPPU) saying it could lead to a monopoly. State Minister for State-Owned Enterprises, Sofyan Djalil, said late last week his ministry needed to slow the move down and coordinate with the KPPU to ensure the holding company would not spark controversy or problems in the future. "The KPPU said the holding company plan could lead to monopolistic practices," Sofyan said. The government is planning to consolidate 14 construction companies into one holding company, which, according to Sofyan, is expected to strengthen state-owned enterprise (SOE) assets in terms of capital and human resources. The state-owned construction companies include PT Adhi Karya Tbk, PT Wijaya Karya Tbk, PT Jasa Marga, PT Perum Perumahan, PT Bina Karya, PT Istaka Karya and PT Hutama Karya. The creation of a holding, he said, would support and stabilize SOEs, accelerate their growth and open opportunities for them to expand overseas. Besides setting up a holding company for the construction sector, the government plans to integrate some companies in other sectors, such as in the banking, mining, pharmacy and agricultural sectors. "The government expects to complete all the plans by the end of the year," Sofyan said. He said his ministry would consult with the KPPU to find the best way to consolidate the companies. KPPU chairman Syamsul Maarif confirmed his office was studying the holding company plan for the construction firms. "We have been studying the plan for two weeks and we will meet with the ministry soon," Syamsul said. Therefore, he said, whether the holding company plan would be restricted or not would depend on studies and meetings. "What we want to prevent is a monopolized market. As we know, currently, the construction firms are competing with each other. Bringing them together in one holding company would end that," Syamsul said. He said the KPPU would only allow such a plan to continue if competition were guaranteed. Sofyan said he would maintain competition among the firms despite the consolidation. "The firms will operate under the same management, however, their non-operational activities will be separate. "We'll build what we call a firewall, which means the firms will be not allowed to share information on tender offers," Sofyan said. He said the firewall would prevent price-fixing in such tenders.

Company vice president Virendra Prakash Sharma said the two new stores were part of the company's plan to expand by 122 stores by the end of the year.

MAP opened 23 new stores in the January to May period, and had 692 stores in operation as of the end of last month. They include stores for fashion, lifestyle, sports, children, Starbucks coffee, Kinokuniya bookstore and high-end department stores Sogo, Debenhams and Seibu.

The company has allocated Rp 275 billion for the expansion, of which 40 to 50 percent will be spent on Harvey Nichols and Domino's Pizza, according to group head of investor relations Ratih D. Gianda.

The company has allocated Rp 60 billion for Harvey Nichols, which will open in Grand Indonesia shopping center in September, she said.

"Harvey Nichols is going to be the most luxurious department store in Indonesia," Sharma said.

The company will open five Domino's Pizza restaurants, the first of which will be opened on Aug. 15 in Pondok Indah, she said.

In line with its American counterpart, Domino's Pizza in Indonesia will focus on delivery, she said.

"Our biggest consideration for Domino's Pizza is to find locations without traffic, as delivery service is our main concept," Sharma said.

To take advantage of holiday sales, the company will also bring forward the openings of 99 other new stores to before the Ramadhan period, he said.

MAP booked Rp 1.03 trillion (US$112.3 million) in sales in the first quarter of this year, up 22 percent from Rp 844 billion in the same period last year. It recorded Rp 3.9 trillion in sales last year, an increase from Rp 3.3 trillion in 2006.

The company booked Rp 115 billion in net profit last year, a slight increase from Rp 109 billion in the previous year.

MAP will pay out Rp 19 billion from its 2007 net profit in dividends, or Rp 11.5 per share, as approved during a shareholders meeting Friday.

The company targets revenue growth this year to increase by between 20 and 25 percent.

Ratih said the company also planned to relocate its Debenhams store in Plaza Indonesia to Supermal Karawaci in Tangerang, Banten, in August.

She said Karawaci's Debenhams would offer more varied products at more affordable prices.

"It's not that we would lower our market segment. In fact, the Supermal Karawaci management was the one who invited us to help upgrade the mall's status level," she said.

"We have our own concepts targeting middle-income customers, like Java Department Store and Sports Depot," she said, adding that the two stores had succeeded in attracting middle-income customers, in line with the company's business strategy to broaden its consumer base.

Sharma said the company was also working to expand its drive-through system for Starbucks. Currently, the company already has 64 Starbucks coffee shops; three of which incorporate the drive-through system.

"The drive-through concept is very profitable, and we're looking forward to opening more Starbucks stores in petrol stations," he said.

Sharma said the company would continue to expand its brand portfolio, and has also this year introduced two new apparel brands: MaxMara and Pull and Bear.

Dian Kuswandini, The Jakarta Post, JakartaDubai-based real estate giant Emaar Properties plans to build a landmark tower in Jakarta, which would be the tallest skyscraper in Southeast Asia, a presidential envoy says.Special envoy for the Middle East Alwi Shihab said Monday the Chairman of Emaar, Mohamed Ali Alabbar, had proposed the project to President Susilo Bambang Yudhoyono during an informal meeting on Saturday. "At the moment, we're still looking for the right location in Jakarta for the site of the project... we are ready to build the tower, our homework is to find the right location, " Alwi told The Jakarta Post. Emaar, the largest land and real estate developer in the Gulf, is famed for its ongoing construction of Burj Dubai in Dubai, which would be the highest skyscraper in the world. The 718 meter-tall building is scheduled to be fully constructed by the end of this year. Alwi said the Jakarta project was part of the company's commitment to invest in Indonesia. In March, Emaar signed a joint venture agreement with the state-owned Bali Tourism Development Corporation to build an integrated tourism project in southern Lombok, West Nusa Tenggara, with a total investment of US$600 million. During the initial stage, they would build four luxury hotels, including Ritz Carlton and Giorgio Armani hotels, along with related tourist facilities. "Emaar has started building its offices in Lombok and is carrying out trainings in conjunction with the tourism ministry for locals to assist in its projects," Alwi said, adding that up until now, the Indonesian government had received investments worth almost $5 billion from the Middle East and that it was targeting to attract $10 billion by 2009. He said among those committed to invest in the country was Ras Al-Khaimah of the United Arab Emirates, which would bring a total investment worth $1.5 billion to construct an integrated port at Tanjung Api-Api, and a railway line from Palembang to Tanjung Api-Api. Another company, Dubai Drydock, is ready to invest up to US$1 billion for the construction of a shipyard and an industrial city in Batam. The envoy said the company had opened its office in Indonesia and had paid for the project's land, while adding that conglomerate company Pacific Inter-Link planned to invest US$500 million in a palm oil refinery plant in Dumai, Riau. Dubai-based Al Ghurair Group also showed its commitment to invest around $500 million in the renovation and improvement of old refinery plants. Previously, Saudi Telecom Company's Axis invested US$1 billion in the telecommunication industry. Alwi said the investors hoped to fully realize their commitments soon. "Some of them complained that bureaucracy in our country has been too slow in responding to their proposals. While it only takes a few months to manage permits in Malaysia, for example, it could take years in Indonesia," Alwi said. This had caused many of them to invest in Malaysia and Singapore instead, he added.

Dian Kuswandini, The Jakarta Post, Jakarta | Thu, 06/26/2008 10:39 AM | Business Indonesia remains attractive to expansion-minded multi-national firms despite global fallout from the U.S.' sub-prime crisis, a survey reveals. According to a report by global real estate management firm Jones Lang LaSalle, of 15 nations surveyed in the Asia-Pacific region, Indonesia ranks sixth in a list of top destinations for business expansions -- ahead of Malaysia, Australia, Cambodia, Japan, Korea, Thailand and Hong Kong. China topped the list, followed by India, Vietnam, the Philippines and Singapore. Eighty-three percent of the multi-nationals said they would increase or maintain their current growth rates in the region, while 28 percent accelerated the growth of their operations in the region in this year's second quarter, the report shows. The survey company's CEO for regional business lines and corporate solutions John Forrest said emerging markets in Asia were the world's bright spots for growth at the moment. Asian countries were less affected by the sub-prime turmoil, with the property sector remaining bright, he said. "We're still seeing strong demand for space. However, an uncertain economic environment is forcing corporations to find smarter ways to manage their growth," Forrest said. Demands for commercial office spaces in Jakarta's commercial business district continued to grow, with the occupancy rate in the first quarter of this year rising 24 percent, the report shows. The growth was due mostly to tenant expansions, the company said. New office buildings in Sudirman and Kuningan in South Jakarta accounted for the bulk of leasing activity, mainly involving banking, oil-and-gas and services companies. Jones Lang LaSalle surveyed 30 senior corporate real-estate executives from leading multi-nationals in Asia-Pacific in the second quarter of this year. The survey covered three sectors -- financial services, technology and consumer goods. Among the three, the financial services sector was predicted to be the most aggressive this year based on data showing that 44 percent of the companies added growth plans in the first quarter of this year, and 33 percent predicted higher growth by the end of this year. The consumer goods sector, on the other hand, showed mixed responses, with one third of the companies saying they would expand their growth plans, another third saying they would downsize their businesses and the rest expecting to maintain their current expansion rates. Companies in this sector will likely look to initiate operations in the region to take advantage of promising new markets or shift current operations within it to search for lower-cost destinations.

"Antam needs a huge amount of money this year to finance its projects in the near future," Alwin said of the company's future programs.

One of its main projects is to acquire Australian-based Herald Resources Ltd., which, according to Alwin, is awaiting a final offer.

"We're currently calculating the best bidding price to acquire Herald. I can say this project has a very good prospect. However, if the prices are too high, there's a fear it will no longer be economical for the company," Alwin said.

The planned acquisition is part of Antam's goal to diversify its business into other mineral commodities to reduce dependence on nickel. Nickel accounted for 80 percent of the company's sales last year, or Rp 12 trillion, up from Rp 5.6 trillion a year earlier.

Partnering with Shenzen Lingnan Nonfernet Co. of China, Antam is competing with PT Bumi Resources to control Herald's Dairi lead and zinc mine in North Sumatra.

In addition to Alwin, shareholders also approved a shake up involving other top positions.Djaja M. Tambunan has been appointed the new financial director, the new operational director is Winardi, the new development director is Tato Miraza, the new human resources director is Achmad Adianto and Denny Maulasa has been appointed general affairs and corporate social responsibility director.

Dian Kuswandini, The Jakarta Post, Jakarta | Sat, 06/21/2008 12:22 PM | Business Directorate General of Post and Telecommunication questions a figure stipulated by a business competition watchdog on consumers' losses caused by price-fixing on text message services (SMS) and will challenge it after a final verdict from court. The statement follows the ruling of the Business Competition Supervisory Commission (KPPU) Wednesday naming six local mobile communication operators for price fixing, causing estimated consumer losses of Rp 2.8 trillion (US$302.4 million) between early 2004 and April 2008. The operators are PT Excelcomindo Pratama (XL), PT Telekomunikasi Seluler (Telkomsel), PT Telekomunikasi Indonesia (Telkom), Bakrie Telecom, Mobile-8 Telecom and Smart Telecom. Director general Basuki Yusuf Iskandar said the losses claimed by the KPPU were based on a basic network cost calculated by the Indonesian Regulatory Agency for Telecommunications (BRTI) in 2007, which could not be applied retrospectively. The KPPU assumed text-message tariffs should not be higher than Rp 114, as the BRTI had set the SMS basic network cost at Rp 76 in June last year. However, Basuki said, "The basic cost was based on the market conditions in 2007, not in the previous years." He said the basic network cost might have been higher between 2004 and 2006, making SMS costs higher too. He said that the basic network cost changed all the time, depending on costs of information technology devices and infrastructure. For example, he said, "The basic network cost as of April this year is Rp 52, making SMS costs lower than before." "That was why the basic cost of Rp 76 could not be applied for SMS rates before 2007," Basuki added. He also emphasized that the cost was not a gross rate cost. "The cost of Rp 76 was only the basic cost for the network system. Operators can set higher rates, as they must also consider their margins and costs of retail activities like market research," Basuki said. Based on these arguments, Basuki said, more research was needed before the KPPU could really claim that the six mobile operators had caused their consumers to suffer financial losses of more than Rp 2.87 trillion. "We will meet with the KPPU to discuss its loss calculations. If consumers want to file for compensation, they should wait until a full study is completed," Basuki said. However, several mobile providers, including Telkomsel and XL, will appeal against the ruling, "We will need to wait for a final verdict (after appeals) before we can make the study," he said. Currently, Basuki said, his office was still drafting a policy that would further regulate text message services, particularly those provided to the public by content providers. "In previous years, we considered SMS an additional feature, that's why we thought it wasn't necessary to regulate it. "Now that SMS has become one of the main features of mobile communications, which contributes to more than 21 percent of operators' revenues, we need to regulate it," Basuki said. He did not specify when the new regulation would be issued, but said his office had started discussing it last year and expected to finish soon.

Dian Kuswandini, The Jakarta Post, Jakarta | Tue, 06/24/2008 10:02 AM | Business Indonesia's telecommunication giants have demanded the government limit the number of new entrants to the industry, citing limited resources and growing investment risk. The Indonesian Cellular Telephones Association (ATSI) chairman Merza Fachys said limited frequency allocations and phone numbers meant there was no room to accommodate new players. "The government must regulate the number of players so as to ensure the sustainability of the industry," Merza said in his speech at the annual national coordination meeting on telecommunication, information and media held by the Indonesian Chamber of Commerce and Industry. Unlimited entry to the industry, he said, would crowd the market, increase competition and generate greater investment risk for existing players. President director of the country's largest telecommunication company PT Telekomunikasi Indonesia Rinaldi Firmansyah said "There are far too many players. The regulation must limit the number of players." Telkom owns a more-than 65 percent stake in PT Telekomunikasi Selular, which has a more-than 50 percent market share of the mobile telecommunication industry. The crowded environment has resulted in an unhealthy tariff war between operators, which has recently seen aggressive rate cuts, Merza said. "Cheaper tariffs generate more customers, but at the price of lowering the quality of the services," he said. PT Indosat corporate services director Wahyu Wijayadi said text message services (SMS) in particular had suffered. "Due to the increased traffic, we had to upgrade our capacity, which later affected SMS deliveries," he said. Operators have to constantly review their business models in order to keep up with the changing market, which is greatly affected by each new entrant, he said. The majority of the speakers at the meeting said regulations were slowly adapting to the industry's changing nature. The industry is moving into a technology convergence era, Merza said. "The current regulations can no longer accommodate the telecommunications industry, which has moved so fast toward a convergence. Mobile operators, television stations, content and application providers have intersected one another, while the current policies regulate them separately," Merza said. Discrepancy between broadcasting laws and telecommunications laws respective to foreign ownership have resulted in confusion when mobile operators apply to broadcast a show. "When a mobile operator wants to provide a new content service like cellular TV, the operator will face a dilemma as it won't know whether the service requires a broadcast permit that belongs to a TV station." Under the broadcasting laws, foreign ownership is limited to 25 percent, while it is limited to 65 percent in the mobile telecommunications laws. The director general of Telecommunication and Information Technology Applications at the Communications and Information Ministry, Cahyana Ahmadjayadi, said poor regulations had hampered industry. "We understand that the current regulations on telecommunications and media overlap, and have not yet accommodated all sectors in the industries," Cahyana said. The government, according to Cahyana, still requires input from all stakeholders to formulate improved regulations.